How is growth inside a permanent policy taxed and when are taxes due?

How is growth inside a permanent policy taxed and when are taxes due?

• A. Growth is taxed annually regardless of withdrawals.
• B. Growth is taxed at the time of premium payment.
• C. Growth is typically tax-deferred; taxes arise when cash value is withdrawn or the policy is surrendered; loans are not taxed unless termination triggers gains.
• D. Growth is never taxed.

Answer: (C)